It is tough to be a home buyer right now in the greater Grand Rapids area. Why...? INVENTORY. Inventory is pretty much all we have been talking about for the last 2 years. The lack of inventory of homes available.
Inventory of homes for sale is measured by determining how long it would take to sell all current homes for sale if no new listings came to the market, based on the current rate of how many people are buying. A normal market is considered to be an inventory of 6-6.5 months. Back in 2008, we had a whopping 13-14 months, a market that strongly favored buyers. In 2012, the inventory started dropping and has not stopped. The strong buyers' market is a thing of the past and has been replaced by a market extremely weighted in a seller's favor.
There has been a low supply of homes for sale since 2013. I remember thinking inventory seemed soooo low at 4 months. Then it slowly crept lower. I thought it was ridiculous when it dipped down to 2.9...then 2.5.... Over the past couple months and the explosion of spring demand, inventory is sitting at a mere 1.9 months. These inventory numbers are at historical lows. We have never witnessed a market like this.
What Does This Mean for Buyers?
You should expect competition and put your best foot forward. You should have a good agent to guide you, explain your options, and make recommendations. If you find a house you really like, you won't have time to think about it or it will be gone.
BUT- This puts an awful lot of pressure on someone who is making a big decision. Here are three questions to quick ask yourself before writing an offer-
1) Can I stay here at least 5 years? In other words, does this home fit your needs and will it continue to in the future? The longer you stay in a home over time, the better the investment.
2) Can I resell it? Is there anything about the house that would make it difficult to resell in the future? Busy streets and strange layouts may still sell quickly in the current housing market. However, if the market lulls in the future will it be a difficult sale? If your answer is yes, but you still love the home, well that is your choice and at least your decision was informed.
3) What does my gut say? Usually you will have some sort of primary guttural instinct. That feeling might be excitement or even fear, but whatever it is, trust your gut.
The ultra low inventory has made it tough to be a home buyer right now. Focus on the end goal of home ownership, be prepared, and be patient. Some economic forecasters were predicting more inventory in 2015 and a more balanced market. This is definitely not the case in Grand Rapids. With Grand Rapids gaining popularity and growing, I'm starting to worry it will be like this for a while. And although this market is difficult for buyers, the rising property values greatly benefit the home owners and the surrounding community.
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Great info on everything real estate.